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Unit 9: Performance Measurement Systems

4. Adapted to the requirements of the principal user: Performance reports serve the evaluation Notes
and decision making needs of the user.

(a) Top management must have reports that give a complete and readily comprehensive
summary of the overall aspects of operations and an identification of major events.
The summaries must be supported by sufficient detail to facilitate tracing
unfavourable situation to their source.
(b) Middle management is usually defined as those members of management in charge
of major subdivisions of the business such as: sales, production and finance. Middle
management is responsible for carrying out the responsibilities assigned to the
subdivisions within the broad policies and objectives established by top
management. Performance reports for middle management, although including
summary data, also are characterized by detailed data on day-to-day operations.

(c) Lower level management (supervisors and foreman) is principally concerned with
co-ordination and control of day-to-day operations; therefore controlled reports
must be designed accordingly. Reports to the foreman and supervisors must be
detailed, simple, understandable and limited to items having a direct bearing on the
supervisor’s operational responsibilities.
The presentation media for financial data may be broadly classified as follows:

(i) Written: (a) Formal financial statements
(b) Tabulated statistics
(c) Narration and exposition using words
(ii) Graphic: (a) Charts

(b) Diagrams and pictures
(iii) Oral: (a) Group meetings
(b) Conferences with individuals

Many top executives have a strong preference for narrative summaries of internal reports.
Words frequently tell the story much more effectively than base figures. Analysis of the
causative factors involved.
Example: In a performance report showing significant exceptions, generally should be
presented in narrative form.
Oral presentation should be a significant part of the internal reporting system in all
companies. Controller and budget directors should encourage the use of executive
conferences where the performance report is presented, explained and discussed. Oral
presentation is important because interpretation and emphasis are possible that are lacking
in other forms.

5. Simple, understandable and report only essential information: Reports should not be too
long; complex tabulations should be avoided. Reports should be carefully screened to
eliminate all non-essential information. Many performance reports include too much
data rather than too little.

Performance reports should be standardized. Executive becomes accustomed to certain
terminology, forms and methods of presentation and know where to look to find the
specific information. Despite the desirability of standardizing performance reports,

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